Supreme Court hears arguments on states’ income tax rights

Screen Shot 2014-11-13 at 9.30.55 AMThe Supreme Court appeared conflicted Wednesday over whether states can tax all of the income of their residents when a portion of those earnings were already taxed in another state.

The case centered on a challenge by a Maryland resident who was a part-owner of Maxim Healthcare Services Inc., a national health-services company. Maxim’s income is earned and taxed in many states. Challenger Brian Wynne is seeking a full Maryland tax credit for his Maxim earnings taxed in other states.

Some justices voiced concerns that Maryland’s rules operated like a discriminatory tariff that created improper incentives to earn income in Maryland and not outside the state’s borders.

Other members of the court worried that a loss for Maryland would mean that a state resident who earned all of his money elsewhere could enjoy local government services without having to pay for them.

Information from The Wall Street Journal


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November 2014